Surface Transportation News: New Zealand’s road user charge transition

In this issue:

• New Zealand road user charge
• Boring Company’s Nashville loop project
• Union Pacific/Norfolk Southern railroad merger
• Streamlining NEPA: a good start
• Transit’s worsening financial crisis
• Impact of reduced electric vehicle sales
• News Notes
• Quotable Quotes

New Zealand’s Road User Charge Transition

Based on recent announcements from New Zealand’s Transport Minister, Chris Bishop, his country is likely to be the world’s first nation to transition completely from motor fuel taxes to road user charges (RUCs) for roadways. To bring this about, the transition will involve innovative technology and a radical reduction in collection cost, assuming everything works as planned.

One advantage is that New Zealand is an island nation, so it does not have to deal with unequipped vehicles driving across its borders. It also has years of experience with trucks paying a road user charge, so the big change will affect motorists, who currently pay for roads via fuel taxes. As in other countries, the growth of hybrids, EVs, and higher-mpg internal combustion engines means that the viability of the “petrol tax” is decreasing, and that appears to be the reason for shifting to RUC going forward.

The national government Cabinet has agreed to a series of legislative and regulatory changes that will end up replacing the petrol tax with an electronically paid RUC. Transport Minister Bishop summarized these as follows:

• Removing the need for physical licenses, allowing for digital driving licenses;
• Enabling a range of electronic RUC devices, including those already available as new-vehicle telematics;
• Enabling flexible payment models, such as post-pay and monthly billing;
• Separating the NZ Transport Agency roles as both RUC regulator and retailer to enhance competition; and,
• Allowing the bundling of tolls and time-of-use pricing into a single payment.

The RUC revenues, like the petrol tax revenues, will continue to be sent to the National Land Transportation Fund, retaining the existing users-pay/users-benefit principle. And Bishop has promised that the RUC system will be like paying for an electric bill online. There will be a Code of Practice for RUC providers.

So, how soon will all this happen? Bishop expects the needed legislation to be enacted in 2026, and once this happens, Bishop says his agency will engage with the market to assess potential technologies and delivery timelines. And both the Transport Agency and the police forces will upgrade their systems for “enforcement in a digital environment.” His goal is that by 2027, the RUC system will be open for business, with third-party providers offering innovative payment services approved by the Transport Agency.

As I set out to write this article, a transportation colleague in New Zealand sent me his own overview of this planned transition. He tells me that companies are already developing in-vehicle devices to provide the data needed to assess the RUC amounts due, based on miles traveled and whatever other specifics get incorporated into the RUC (vehicle weight, for example). Four electronic system providers have been approved by NZTA. One of those companies, he noted, is already active in the United States (EROAD).

If New Zealand implements this ambitious plan, it will provide a model for other countries. I will be especially interested to learn what the cost of collection of the new RUCs will be, since at this point in the U.S., estimates of the cost of collection are 10 to 20 times what it costs to collect fuel taxes. If New Zealand can get this down to a few percent of the amount charged, that will be a major breakthrough.

The other complication for the United States is that state and local governments own and operate nearly all the roadways. So each state government or transportation department will need to figure out how to deal with out-of-state vehicles.

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Boring Company Launches Nashville Loop Project

Elon Musk’s Boring Company has been in the news since a media blitz late last month announcing an agreement with Nashville, TN, to build and operate a 10-mile underground Music City Loop linking downtown to the Music City Center and the Nashville International Airport. Boring Company states that the system will be entirely privately financed as a public-private partnership with the city of Nashville.

The company evidently did its public affairs homework before making the announcement, because it has been endorsed by Gov. Bill Lee, Sen. Marsha Blackburn, the city and state chambers of commerce, and U.S. Transportation Secretary Sean Duffy. As a long-time supporter of transportation public-private partnerships (P3s), I’m inclined to be favorable to such projects. But at this point, I have many questions.

Most fundamentally, I don’t understand the business model. The project obviously needs a revenue source in order to provide a return on the major investment needed to build the tunnels that comprise the Loop and equip it with the vehicles that will transport passengers. The only operational model is the Boring Company’s Las Vegas Loop, of which only 2.1 miles of a planned 68 miles are completed and in operation as of last year. The fare to use one of the Teslas using the Loop is in the $4-$6 range. No published data exists on the number of daily trips and the revenue they are generating, and without that information, it’s difficult to see how financially viable the Vegas Loop may turn out to be when it is fully built out and in operation.

The Boring Company proposed similar Loops for Chicago, Los Angeles, and Washington, D.C. in 2017-18, but those projects never materialized. Other cities where post-pandemic presentations were made include Miami and Fort Lauderdale, where they attracted considerable interest from local officials, but never went further. Boring Company’s only other active project is in Dubai.

Another question is whether using Teslas as the vehicle is the best alternative. In Vegas, the Teslas are being driven by Boring Company drivers, though Tesla’s “self-driving” capability should be easy to use in this highly constrained one-way tunnel (as compared with mixed traffic on city streets). So, automated operation would reduce operating costs somewhat. But still, why not 10-passenger electric shuttles? To be sure, if the model is to offer customers an immediate departure when they show up, an immediately available vehicle is superior. But this policy would also limit passengers per hour that the system could handle. It’s far from clear how the revenue model would generate enough to service construction bonds and provide a return on the initial investment.

A public-private partnership (P3) of the design-build-finance-operate-maintain (DBFOM) model, in particular, needs to have a detailed long-term concession agreement. This document spells out the roles of the public partner and the private partner. Generally, the public partner has considerable oversight responsibilities, and the extent of its role in various policy questions (schedule, user charges, duration, future decision during the term of the agreement, etc.) is spelled out in the agreement. Also critically important are termination provisions. These typically are two possible ways in which the agreement may be terminated by the public partner: for cause (serious failure to comply with the terms of the agreement) or for convenience (the public partner changes its mind some years into the agreement, and commits, in advance, to compensation for this kind of early termination).

There has been no mention of any kind of P3 agreement. If such an agreement exists, or is negotiated and made public, some of the many citizen concerns and complaints about the project might be satisfied.

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Maximizing the Benefits of a Transcontinental Rail Merger
By Marc Scribner

On July 30, two of the largest U.S. freight railroads notified federal regulators that they plan to apply for approval to merge. Under the proposed deal, the largest Class I carrier, Union Pacific, would acquire the fourth-largest, Norfolk Southern. The combined carrier would be the first truly transcontinental railroad, serving 43 states over 50,000 miles of track and linking roughly 100 seaports on the East and West Coasts. There is little overlap between the two railroads’ current networks, so the competitive effects of a merger are likely to be positive. While an expanded Union Pacific could certainly realize network efficiencies, realizing the full benefits of this transaction will require regulatory modernization.

According to their July pre-filing notice submitted to the Surface Transportation Board (STB), the national railroad economic regulator tasked by Congress with reviewing and approving industry mergers and acquisitions, Union Pacific and Norfolk Southern plan to submit a formal application to consolidate on or before Jan. 29, 2026. The most recent major rail merger between Canadian Pacific and Kansas City Southern in 2023 took 15 months to gain approval from the STB. A similar timeline is likely in this case, so we can perhaps expect final approval in the first or second quarters of 2027, assuming everything goes smoothly.

Union Pacific operates primarily west of the Mississippi River, while most of Norfolk Southern’s operations are in the east. Intra-rail competition between the two carriers is very limited given their geographic separation, with the vast majority of overlap occurring in Missouri, where both railroads operate between Kansas City and St. Louis. The STB has long recognized that end-to-end mergers like the one proposed by Union Pacific and Norfolk Southern can potentially reduce intra-rail competition and service quality. As a result, their Missouri operations will be a major focus of the STB’s merger analysis and approval conditions. The railroads will need to propose remedies to mitigate and offset any competitive harms arising from their merger if they are to secure STB approval.

In addition, Union Pacific and Norfolk Southern are likely to emphasize how offering single-line, coast-to-coast intermodal rail service will increase competition with long-haul trucking. This is because the STB’s major merger regulations since 2001 have required that carriers demonstrate that the transaction would enhance competition, rather than the previous requirement that competition not be degraded under consolidation.

While the network efficiency benefits arising from a combined Union Pacific and Norfolk Southern are potentially very large, maximizing those benefits to carriers, shippers, and consumers will require regulatory modernization by the Federal Railroad Administration (FRA), the nation’s rail safety regulator.

One problem is that the FRA’s rail safety regulations are often highly prescriptive, which limits alternative means of compliance as technology and practices evolve. Related to this problem is that these regulatory requirements often reference outdated technical standards. Based on my analysis of the principal rail standards compendium—the Association of American Railroads’ Manual of Standards and Recommended Practices—and the FRA’s regulations that incorporate those standards by reference, there is a roughly 10-year lag between the latest standards and those referenced in rail safety regulations. Unless Congress establishes a consistent mechanism requiring the FRA to consider regulatory updates whenever new standards are published, this conformity gap between standards and regulations is likely to persist and grow.

Another problem is that the FRA has adopted an inconsistent approach to new technologies and practices, often driven by special interest politics. During the Biden administration, FRA political appointees overruled agency career staff to restrict the use of automated track inspection technologies, despite the FRA’s own data showing the technology was far more reliable in detecting track geometry defects than traditional visual inspections. This action was driven by the union representing track inspectors. The Association of American Railroads currently has a waiver petition pending with the FRA to recommit the agency to this proven technology, which Reason Foundation supported in comments to the FRA.

Similarly, the FRA during the Biden administration finalized a regulation establishing a general requirement that trains operate with at least two crew members, despite conceding it could not quantify any benefits of the rule. The practical result is that U.S. railroads will find it difficult to leverage automation technology increasingly available around the world and even single-crewmember train operations that have long been the default in Europe. And similar to the political interference on automated track inspection, the FRA’s crew-size regulation fulfilled an explicit campaign promise made to unions representing train engineers and conductors by then-candidate Biden.

The trucking industry is anticipated to become increasingly automated in the coming years. Earlier this year, driverless truck startup Aurora launched commercial operations in Texas and has ambitions to expand driverless service throughout the Sun Belt over the next two years. Driver wages and benefits account for nearly half of truck operating costs, so the potential savings from driverless operations are large.

To give freight rail a fair shot at competing with trucking, FRA leadership should seek to restore evidence-based policymaking at the agency, rather than deny railroads superior technology for arbitrary and capricious reasons. Congress can also play a positive role, such as by passing legislation that would require the FRA to consider performance-based regulatory alternatives, streamline the waiver petition process, and periodically conduct comprehensive reviews of its policies to assess their effectiveness and compatibility with the current best technologies and practices.

The potential acquisition of Norfolk Southern by Union Pacific could enhance freight transportation competition in exciting new ways. But the ability of intermodal rail to compete effectively with increasingly automated trucks into the 21st century hinges on the ability of the freight rail industry to innovate. Innovation will require business and engineering savvy, to be sure, but also an accommodating regulatory environment.

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Streamlining NEPA—Good Start But More to Be Done

The first seven months of 2025 have seen significant policy changes to the interpretation of the National Environmental Policy Act (NEPA). The Supreme Court and the White House have both reduced the adverse impacts on major infrastructure projects that resulted from decades of executive orders and legislation. But one of the most serious problems—excessive post-assessment litigation—remains largely untouched.

The first big change came from the Supreme Court. In a 9-0 decision, the Court ruled that an organization opposing a new short-line railroad line in Utah had gone way overboard by considering potential environmental impacts more than a thousand miles away from the railroad’s location (Seven County Infrastructure Coalition v. Eagle County). The decision found that NEPA itself “imposes no substantial restrictions” on development. Justice Brent Kavanaugh wrote that NEPA is supposed to be “a procedural cross-check, not a substantive roadblock.” The judgment was unanimous, but three liberal justices did not join in Kavanaugh’s written opinion.

The second change came from the Council on Environmental Quality (CEQ), which was empowered to issue regulations (not just policy advice) via Executive Order 11991, issued by President Jimmy Carter in 1978. President Trump voided that E.O. back in January. The revamped CEQ on July 3 released revised implementing procedures for a large array of federal agencies, explaining that these rules are purely procedural in nature, which do not “impose substantive environmental obligations or restrictions,” per Rebecca Higgins’ summary for the Eno Center for Transportation. U.S. Department of Transportation (DOT) subsequently released two revisions to what had been regulations. One revised rule clearly states that the question of whether an impact is “significant” is a matter for the agency’s expert judgement (apparently building on the Supreme Court’s Seven Counties decision).

In my transportation policy (non-legal) assessment, these are important and welcome changes that should streamline environmental reviews and enable much-needed energy and transportation infrastructure projects to move toward implementation with less delay and somewhat lower cost to users and taxpayers.

However, there is still a huge elephant in the room: post-review environmental litigation. None of the above reforms directly limit such litigation, though they may reduce the kinds of arguments litigants can make successfully. The good people at the Breakthrough Institute are continuing to focus on this problem, as discussed in their new study, “The Procedural Hangover: How NEPA Litigation Obstructs Critical Projects.” Their team examined 1,400 NEPA cases subjected to litigation between 2013 and 2022. The median project in the dataset spent 19 months in litigation, with 7% spending more than six years. They also found that only 26% of the litigations ended up with a legal flaw in the agency’s review. They also found that environmental nonprofits were involved in 75% of the judgments in these cases.

Readers of this newsletter may remember an article in our July 2024 issue discussing a then-new Reason Foundation study that focuses primarily on environmental litigation. Part 5 of that study offers a large array of potential litigation reforms, one of which—removing CEQ’s power to issue regulations—has already happened. Others include limiting the types of potential litigants eligible to sue, having Congress impose a higher standard for injunctive relief, or not entertaining public comment after a final Environmental Impact Statement has been released. Given the major changes that have taken place in the last six months, this menu of potential litigation reforms is newly relevant.

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Transit’s Worsening Financial Crisis
By Baruch Feigenbaum

Despite the economic recovery of cities, transit systems are still facing significant economic headwinds. Recent reports from three of the six legacy rail systems and a nationwide analysis by the Government Accountability Office (GAO) show the severity of the problem. For some systems, transit ridership has been slow to recover from COVID, still below 80% of 2019 levels. And rail, particularly commuter rail, has been slower to recover than bus and paratransit, sometimes at less than 50% of 2019 levels. Yet rather than trade the Titanic in for a seaworthy vessel, agencies seem to be hoping that the giant iceberg they hit five years ago will just melt away.

The GAO report examined the nation’s 31 commuter rail lines. It found that while overall service (the number of trains and buses operating) was above 2019 levels, ridership was 31% lower in fiscal year 2023. Operating more services with fewer riders leads to budget holes that need to be plugged. To plug these holes, agencies relied more on government funds, primarily from federal, local, or other sources. These agencies also relied heavily on COVID-19 relief funding, which has since been exhausted.

Most of these agencies’ long-term fiscal plans seem to be to replace farebox revenue with state subsidies. One example is Virginia Railway Express (VRE), which operates commuter rail service between the southern and western suburbs of Washington, D.C. and the city itself. Between 2019 and 2023, service levels remained similar, but ridership dropped by 65%. In 2019, fares and agency-generated revenue were the largest funding source, 40% of the total. State funding made up less than 30%. But by 2023, fares and agency-generated revenue totaled 8.5% while state funding provided more than 51% of the total revenue.

Several heavy-rail operators are also struggling with ridership. To begin with, in FY 2026, Chicago’s transit operators are facing a $770 million budget deficit. The Chicago Transit Authority is threatening to shut down half of the city’s “L” lines and eliminate almost 60% of bus routes. The legislature could provide state funding, but lawmakers want to reform the Regional Transit Authority, which oversees the Chicago Transit Authority, suburban PACE bus lines, and the METRA commuter rail line.

In San Francisco, the Municipal Transit Agency is facing a $322 million budget deficit. The agency is examining a series of budget cuts and ballot measures to enact new taxes. The agency has a little more time—until May 2026—to deliver its recommendations.

Finally, in Philadelphia, the Southeastern Pennsylvania Transportation Authority is threatening to increase fares from $2.50 to $2.90 in September. It will implement a hiring freeze and eliminate additional services, bringing the total cuts to half its services. Earlier this month, Pennsylvania lawmakers introduced dueling assistance plans, with a Democratic plan increasing funding for highways and transit, and a Republican plan using money from an existing statewide transit fund and indexing fares to inflation.

To be fair, agency leaders have taken some corrective actions. They have redesigned bus networks and added microtransit. They have embraced technology and partnered with ride-hailing companies for last-mile service. But they have not been able to solve the big problem: costs are too high and riders are too few. Agencies cannot control the past, but to solve the problem for the future, they need to make the following changes.

First, cut service to match actual ridership levels. After the initial COVID-19 surge, many transit agencies quickly restored former service levels. Reducing transit service can deter ridership. But increasing headways for rail lines operating at less than half of their capacity is a needed change.

Second, do not rely on any type of emergency funding. Many agencies used COVID-relief dollars as a crutch. Rather than make long-term structural changes, they ran up charges on Uncle Sam’s credit card. Now that the federal government has ceased pandemic-related stimulus and bailouts, most transit agencies are in a much worse position today than if they had started on the road to reform three years ago.

Third, try to control labor costs. The Congressional Research Service estimates labor is 62% of transit system costs. There are legal limits to what transit agencies can do, but adopting best practices in management and contracting for new service are two obtainable goals.

Fourth, don’t exacerbate problems by making transit service fare-free. Zohran Mamdani, the democratic socialist running for mayor of New York City, wants to make buses fare-free. While not paying fares sounds attractive, it doesn’t help poorer residents, who already have fare-free or heavily discounted transit cards. But it does help upper-middle-class residents, who don’t need a subsidy and are a large share of transit riders in the legacy rail regions. In the New York Metropolitan Transportation Authority (MTA’s) case, free transit, if including the subways, could blow a $668 million hole in the budget.

Finally, states and localities can cap general funding to transit. That might seem like tough love, but to ensure agencies adopt recommendations one through four, a change-forcing mechanism is necessary. Unlike highways, which can and should be funded entirely from user fees, transit cannot realistically operate without subsidies. Reason Foundation has justified providing subsidies to lower-income workers using transit on the grounds that providing cost-effective transportation to work is better than welfare programs. However, there has to be some cap. Farebox revenue supplemented with other revenue sources (tax increment financing from transit-oriented development, advertising, etc.) should provide 40% of the funding for large agencies, 30% for medium agencies, and 20% for small agencies. Pre-COVID, these were numbers that almost every transit agency in the country could attain. If agencies cannot meet them today, they have too much service, too low fares, or too much inefficiency.

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Reduced EV Sales and the Impact on Mileage-Based User Fees

These are not good times for electric vehicles (EVs) in the United States. The most recent AAA poll on this subject revealed the following:

• Only 16% of adult Americans say they are likely or very likely to buy an EV as their next vehicle, the lowest percentage since 2019. The fraction saying such a purchase is unlikely or very unlikely increased to 63%, the highest since 2022.
• The reasons most-cited in the AAA survey were concerns about charging, high battery repair costs, and purchase price, in that order.
• One third of those unlikely to buy cited safety concerns, while others worried about being unable to have a charger at their residence.
• The percentage who believe that most cars will be electric within 10 years declined from 40% in 2022 to 23% in this year’s survey.

Reinforcing motorist concerns are several political developments. One is the coming elimination of the $7,500 federal tax credit, which will make an EV comparable in size to a conventional vehicle even more expensive to purchase. And because EVs depreciate considerably faster than internal combustion engine (ICE) vehicles, more potential EV buyers are shifting to the used-vehicle market. Since those EVs are already in the vehicle fleet, a purchase from a used-car dealer adds nothing to the total EVs in use.

Recent Wall Street Journal headlines included “EV Makers Rev Up Incentives to Shift Sales Out of Reverse” followed by “Detroit Quickly Pivots as America Rediscovers Love for Gas Guzzlers.” But Ford is taking a gamble, announcing a plan to spend $2 billion to convert a plant in Louisville, KY, to produce a small EV it plans to sell for $30,000. This comes after Ford lost $5 billion on its existing EVs in 2024.

The one bright spot in the U.S. EV market is hybrids. Sales of hybrids now exceed those of fully electric vehicles. In the first quarter of this year, conventional hybrids accounted for 12% of new vehicle sales, with plug-in hybrids adding another 2%. A report from Bank of America projects that hybrids will account for 20% of new-car sales by 2028.

What do these changes mean for transportation policy? Projections from several years ago that were relied on to support the transition from per-gallon fuel taxes to per-mile charges need to be revised, given the likely slower growth of EVs over the next decade or two. That will provide time for more states to plan and carry out pilot projects to test mileage-based user fees (aka road user charges). The longer time frame will also enable more research and development on lower-cost ways to collect per-mile charges (which currently would cost 10 to 20 times as much as fuel taxes, as a fraction of the revenue collected). This will also give Congress more breathing room to agree on increased revenue sources for the Highway Trust Fund, other than just borrowing ever more money from future generations.

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News Notes

$11 Billion Express Toll Lanes Financed in Georgia
Georgia DOT reported (Aug. 5) that it had reached financial close with a private consortium on the $11 billion SR 400 Express Lanes project. The consortium is led by Meridiam, Acciona, and ACS Infrastructure. The project will add two express toll lanes each way on 16 miles of SR 400 in northern Atlanta. The financing includes $3.4 billion in tax-exempt Private Activity Bonds (PABs), the largest ever federal TIFIA loan ($3.9 billion), and $3.36 billion in private equity. The design-build-finance-operate-maintain P3 concession term is 56 years. The project will also add two stations along the route for express bus service that will make use of the faster and more reliable express lanes. This is the first of several express toll lanes P3 mega-projects in the Atlanta metro area.

Pennsylvania DOT Reviewing Express Lanes Proposal
Eugene Gilligan reported in Infralogic (July 23) that PennDOT is reviewing a $3.25 billion express toll lanes project for the Philadelphia metro area, submitted as an unsolicited proposal by Cintra. It would add ETLs (two such lanes each way) to a congested 17-mile stretch of I-76 known as the Schuykill Expressway. The DBFOM project would have a term of 50 years. If this project goes forward, it would be the first P3 express toll lanes north of Virginia and the first such lanes in a metro area that developed prior to the automobile age. Gilligan reports that the Cintra proposal was first submitted in Oct. 2021, and a PennDOT source told him that “Due to the complexity of the project, it is still under consideration.”

Shifts to Electronic Tolling in Europe
While several European countries have long relied on tolling (e.g., France, Italy, and Spain), many others use a permit system called Eurovignette. But as of next summer, the Netherlands will shift from that method to a new electronic toll system for truck traffic. It will apply to all trucks weighing more than 3.5 tonnes, whether Dutch or from other countries, and the revenues will be dedicated to Dutch highways. Switzerland has unveiled a similar plan. It has its own Swiss vignette for vehicles under 3.5 tonnes that use motorways and expressways. But for trucks, it is underway with a revised electronic tolling system to be implemented by Kapsch TrafficCom and the Swiss company LostnFound. Under an eight-year deal, the joint venture will provide onboard units that interface with a satellite tolling system; the contract calls for the delivery and installation of 55,000 onboard units to be installed in Swiss trucks.

Rivian Introduces Electric Commercial Van
Rivian Automotive, in recent years, has provided more than 20,000 of its electric custom delivery vans to Amazon. With that impressive track record, the company is now offering a new Rivian Commercial Van to delivery firms nationwide. There are two versions, the 500 for city streets and the larger 700 for larger amounts of cargo. Their respective ranges are 161 miles and 153 miles. The vans come equipped with automatic emergency braking, collision warning, and 360-degree visibility. Both models have been in test service with several large fleets, according to an article in FleetOwner (Feb. 10, 2025).

DelDOT Toll Increase Will Charge Non-Delaware Vehicles More
The three toll roads in Delaware plan to implement toll increases later this year, in the vicinity of a 25% increase, according to Delaware DOT (June 15). Two aspects of the plan strike me as bizarre. First, DelDOT charges the same amount for E-ZPass and cash customers, even though its costs are higher for cash. Second, the increases will be greater for out-of-state vehicles than for Delaware-registered vehicles. I’m not a constitutional scholar, but it seems to me that the Constitution’s interstate commerce clause prohibits such discrimination against non-state citizens. That was one of the founding principles of the Constitution. I’m sure litigation over this discrimination will take place if DelDOT actually goes through with this plan.

First Highway P3 Announced for Newfoundland and Labrador
Infralogic reported (June 10) that its first P3 highway procurement is underway. The project involves upgrading 150 miles of the Trans-Canada Highway in the northern part of Newfoundland. Under a 30-year concession, the selected team will design, build, finance, and maintain the rebuilt highway. The article reported that Plenary, Fengate, and Municipal Enterprises Ltd. submitted responses to a Request for Qualifications in January. The Request for Proposals had been expected in the spring, but “procurement decisions are taking longer than expected,” reporter Liam Ford explained in June.

Sec. Duffy Cancels Funding for DC-Baltimore Maglev Project
Long-time readers of this newsletter may recall several critical assessments of unanswered questions about proposed maglev projects. Yet the planners’ dreams continued, with one example being the proposed $20 billion line from Washington, D.C. to Baltimore. It was first proposed in the 1990s, but generated a wide array of objections. It finally received a modest $26 million grant from the Federal Railroad Administration in 2016, but with little observable progress since then. DOT Secretary Sean Duffy on Aug. 1 announced the cancellation of those grants.

Florida Brightline Sued by Railroad Partner
Higher-speed passenger rail company Brightline Florida runs mostly on the tracks of the Florida East Coast (FEC) Railway. It seemed like a natural partnership for the startup, for-profit passenger rail company, and the freight railroad whose right of way has some degree of excess capacity. But last month, FEC sued Brightline for, FEC says, concealing its plans to start a commuter rail line from West Palm Beach to Miami on the FEC right of way. FEC says this violates its agreement with Brightline because it would overload the freight railroad’s capacity. Meanwhile, Brightline saw its bonds downgraded by both Fitch Ratings and S&P, after posting a $550 million net loss last year.

Ups and Downs in India’s Toll Road Industry
Rouhan Sharma reported last month in Infralogic (July 8) that toll roads operator Abertis is seeking partnerships for toll roads in India. Less than a month later, the same reporter spotted two such opportunities. Macquarie Asset Management has begun a process to sell a portfolio of nine Indian toll road concessions. A separate article on the same day (Aug. 6) revealed that KKR is planning to sell a $300 million stake in Vertis Infrastructure Trust, which has a portfolio of Indian toll road concessions. That article also noted that I Squared Capital is planning, with KKR, to offer toll road concessions from Vertis and Cube Highways Trust.

Major Tunnel Projects Under Way in Australia
Twin tunnel boring machines are at work on a pair of tunnels for the North East Link project in the Melbourne metro area. The A$16 billion project is building the tunnels, each to handle three lanes of traffic. They will be 6.5 km long and at a depth of 45 meters. The overall project, aiming to reduce congestion in the metro area, includes upgrades to the M80 ring road and the Eastern Freeway. Meanwhile, in Brisbane, twin 6 km tunnels are being bored under the Brisbane River. These tubes will serve to extend Brisbane’s existing rail transit system to the rapidly growing South East Queensland metro area. Originally budgeted at A$5.4 billion, some estimates put the total as likely to be A$17 billion.

North Carolina Express Lanes Extension Construction to Begin in 2030
The Charlotte Regional Transportation Planning Organization and NCDOT have announced that the $3.2 billion project to extend the I-77 express toll lanes 11 miles from downtown Charlotte to the South Carolina line will begin in 2030. NCDOT plans to procure the project as a revenue-financed long-term DBFOM P3, similar to the way the existing express lanes were procured last decade.

Sacramento Express Toll Lanes Network Under Way
Caltrans is adding express toll lanes to I-80 in Yolo and Solano Counties, as reported by CBS Sacramento last month. Derek Minnema, Executive Director of Connector JPA in Sacramento, tells me these links are part of a plan for a network of such lanes in the Sacramento metro area. Most of the projects will convert existing HOV lanes to HOT-3 lanes, in which carpools of three or more will not be charged, but all other vehicles will pay the variable toll. Similar express toll lane networks exist and are being expanded in the metro areas of Los Angeles, San Diego, and the San Francisco Bay Area.

Massachusetts Moving Forward to Revamp Service Plazas
The 18 service plazas on the Massachusetts Turnpike will be rebuilt and modernized under a 35-year P3 lease agreement with Applegreen. In winning the concession, the company committed to spending $750 million in improvements to the plazas and will share a portion of the revenues from the plazas with MassDOT. This agreement is similar to the way other toll roads have modernized and upgraded their plazas. Since 2010, six other toll road providers have signed similar P3 leases in Connecticut, Delaware, Florida, Indiana, Maryland, and New York.

More Road Diet Funding Is Unlikely—U.S. DOT
DOT Secretary Sean Duffy last month announced that its agencies will look “less favorably” on proposed projects that would reduce lane capacity for vehicles. The warning came in a Notice of Funding Opportunity for the Safe Streets and Roads for All Program. Anti-auto groups (such as Streetsblog) are very upset about this change, with their usual talking points about “excess road capacity.”

Hawaii Road User Charge Begins
Since July 1, EV owners in Hawaii will have the option to pay either a road user charge of $8 per 1,000 miles or a flat annual fee of $50. Both options replaced the previous $50 EV annual registration surcharge. Implementing such a program is simpler in Hawaii because no out-of-state vehicles use its roadways.

Massive Bridge Project Under Way in Italy
A $15.6 billion bridge will span the Strait of Messina that separates Italy from Sicily. The long-dreamed-of span has won government approval, and a contract has been awarded to a consortium that includes Italian contractor Webuild. The bridge will include highway lanes and a railroad line. Its suspended span will be 10,827 feet, the longest in the world. The financing plan is not clear, but the Italian government says the bridge will qualify as supporting national defense under a new NATO policy.

Australia Selects Japanese Builder for New Navy Ships
In a prior article in this newsletter, I suggested that the U.S. Navy could upgrade its aging fleet faster and less expensively by contracting with the world-class shipbuilders of Japan and South Korea. Australia is now pursuing that course, with a contract to produce its new frigates awarded to Mitsubishi Heavy Industries. Under the agreement, the first three frigates will be produced in Japan and the remainder in Australia. The frigate is an upgraded version of the Mogami frigate being procured by the Japan Maritime Self-defense Force.
  
Stop the Bleeding on California High Speed Rail, Analyst
In a July 7 online commentary, Baruch Feigenbaum argued that “walking away from the decades-late, largely unfunded California HSR project is the least-bad way forward.” The article first appeared in the Orange County Register and was subsequently posted on the Reason.org website.

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Quotable Quotes

“I have a report from an international HSR [high speed rail] association [which finds that] HSR construction generates huge amounts of GHG [greenhouse gases] but projects that it takes 5-10 years after the beginning of HSR operations to reach break-even. The situation in California is even worse because (1) the GHG benefits of HSR have been significantly overstated because the state has projected passenger loads higher than any HSR in the world has ever achieved, and (2) if California HSR ever commences operations, it will be in the Central Valley, which has the lowest population, lowest density, and the least projected ridership. Since this generates the biggest ‘last mile’ problem along the alignment, it will be particularly difficult to attract passengers who will have to find ways to access the HSR origin and destination stations, rather than just drive themselves.”
—Thomas A. Rubin, transportation consultant, email to Robert Poole and others, July 17, 2025

“This project [Maryland maglev] lacked everything needed to be a success, from planning to execution. This project did not have the means to go the distance, and I can’t in good conscience keep taxpayers on the hook for it. We will continue to look for exciting opportunities to fund the future of transportation.”
—Sean Duffy, U.S. Secretary of Transportation, DOT news release, Aug. 1, 2025

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The post Surface Transportation News: New Zealand’s road user charge transition appeared first on Reason Foundation.

Source: https://reason.org/transportation-news/new-zealands-road-user-charge-transition/